There was an abundance of new homes for sale. The market needed to adjust to normal supply and demand. The new home inventory is now being controlled, not as many permits are being issued which will assist in stabilization.
Foreclosures have increased from investor heavy real estate purchases. Many of these investors planned on quick flips which did not pan out. They used subprime adjustable rate financing to make these purchases and could not keep up with the payments as they increased. Most subprime lending programs have been done away with.
The number of first time buyers will increase. Many of the Gen Ys (born 1977 to 1994) will now be buying their first homes. Falling interest rates will motivate many of these buyers to purchase. The economy has generated 4 million net new jobs and wages are rising. This will allow more people to be able to afford to own a home.
Since the dollar has decreased in value, more Canadians and Europeans are going to be purchasing U.S. real estate because our prices are approximately 50 percent cheaper than they were just three years ago.
Anyone that is currently renting and thinking of buying a home should consider that research from the Federal Reserve showed that between 1995 and 2004, the average renter accumulated $4,000 in wealth, while the average homeowner accumulated $184,400. NAR's research shows that approximately 97 percent of the homeowners will have a positive equity position after six years.
The bottom line is that 2008 will be a great opportunity for buyers to get good deals with low interest financing. If buyers wait, prices and interest rates will be higher and the reluctant buyer may be forced out of the market. Contact eHome Realty for assistance finding a great deal at 702-235-8047.